LONDON – Up to 980 jobs could be cut at UK fashion group New Look as part of a rescue plan which will see it shut 60 stores and cut rent on nearly 400 shops. With 906 stores globally, New Look says it will close nearly 10 per cent of its 593-strong UK store estate in a company voluntary arrangement (CVA), a mechanism which enables a company to exit unprofitable branches and negotiate rent reductions on the remaining estate.
The company said the closures would lead to redundancies, although it would look to redeploy staff elsewhere within the business if possible.
New Look is seeking creditor approval on the proposal, which is due on 21st March 2018. All UK stores will remain open as normal during the period of the proposal and the Company’s online sales channel will be unaffected by the proposed changes.
Daniel Butters and Neville Kahn of Deloitte LLP, the business advisory firm, have been appointed as nominees to the CVA.
Alistair McGeorge, executive chairman of New Look, said: “Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability.
”We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time.”
Daniel Butters, partner at Deloitte, said: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“New Look is an iconic brand on the high street and the CVA will provide a stable platform upon which Management’s turnaround plan can be delivered. We have fully engaged with the British Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the company.
“It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”